My understanding is that this is normal in pretty much every East Asian country: HK, China, Korea, Japan. I don't think the education systems in any of these countries can really be considered any worse than any other system, and arguably has churned out way more talented and driven people to contribute to humanity.
I am personally anti-test myself, but what is a better option? Someone suggested "lottery", but that idea makes me shudder, as possibly the only option worse than testing. In an ideal world, every student can be accommodated in the learning ecosystem, and we don't require a standardized metric to figure out if a student should advance to the next level. We would also pace what they're being taught to their competencies and give each student personalized learning and testing material.
But we are nowhere near being able to do that, from a resource management, personalization design, evaluation or teacher training perspective (anywhere in the world). I have spent much time thinking about this, and I can't come up with a better idea for fairly allocating our education resources for places with ridiculously large number of students, and for evaluating the progress of the partakers of that resource (current students). That is, at least until we invest heavily in researching how to better evaluate students and identify the right metrics to measure and measure them well.